Keurig Dr Pepper and JDE Peet’s Merge to Create 2 Global Beverage Firms
Keurig Dr Pepper and JDE Peet’s Merge to Create 2 Global Beverage Firms

By Mary Prenon

Keurig Dr Pepper (KDP) announced a merger agreement on Aug. 25, in which KDP will acquire JDE Peet’s in an all-cash deal. The transaction will create an international coffee leader, combining KDP’s Keurig—North America’s leading single-serve coffee platform—with JDE Peet’s global portfolio of coffee brands.

Following the close of the acquisition, KDP will separate into two independent, U.S.-listed publicly traded companies—a soft drink refreshment company, Beverage Co., and the Global Coffee Co., being billed as the world’s No. 1 pure-play coffee firm.

“Today’s announcement marks a transformational moment in the beverage industry, as we build on KDP’s disruptive legacy by creating two winning companies, including a new global coffee champion,” Tim Cofer, CEO of KDP, said in a statement.

“Through the complementary combination of Keurig® and JDE Peet’s, we are seizing an exceptional opportunity to create a global coffee giant.”

Cofer noted that the acquisition of JDE Peet’s will not only enhance KDP’s coffee positioning but is also expected to garner almost $400 million in revenue to be realized over the next three years.

“We are excited to join forces with Keurig to chart the future of global coffee by leveraging our combined portfolio of the world’s most beloved coffee brands,” said JDE Peet’s CEO Rafa Oliveira in a statement.

“This highly complementary transaction will deliver an attractive premium for our shareholders and will create compelling future growth opportunities for our employees, customers, and other stakeholders.”

Under the terms of the agreement, KDP will pay JDE Peet’s shareholders 31.85 euros per share in cash, a 33 percent premium to JDE Peet’s 90-day volume-weighted average stock price, representing a total equity consideration of 15.7 billion euros. JDE Peet’s will also pay a previously declared dividend of 0.36 euros per share before closing, with no reduction to the offer price.

Once separate companies have been established, the new Global Coffee Co., with almost $16 billion in combined annual net sales, will be the world’s largest pure-play coffee firm serving more than 100 countries. The company statement indicates that coffee is one of the most consumed beverages globally.

The merger is also expected to expand Global Coffee’s geographic reach in emerging markets with over 40 manufacturing facilities.

The new Beverage Co., producing over $11 billion in annual net sales, includes a portfolio of historic and emerging brands and an expanding Direct-Store-Delivery (DSD) system.

KDP noted that Dr Pepper is America’s leading soft drink brand with annual revenues topping $5 billion, followed by Canada Dry, 7UP, and A&W. The new Beverage Co. also plans to invest in both organic and inorganic growth to further its market expansions.

Cans of Dr. Pepper and Pepsi are displayed on a shelf at a grocery store in San Anselmo, Calif., in a file photo. (Justin Sullivan/Getty Images)
Cans of Dr. Pepper and Pepsi are displayed on a shelf at a grocery store in San Anselmo, Calif., in a file photo. Justin Sullivan/Getty Images

Until the acquisition has been completed, the combined company will be led by KDP’s management team, including CEO Tim Cofer and CFO Sudhanshu Priyadarshi. Following the company separation, Cofer will become CEO of Beverage Co., and Priyadarshi will serve as CEO of the Global Coffee Co. JDE Peet’s Oliveira will continue to act as CEO until the acquisition closes.

Global Coffee Co. will be headquartered in Burlington, Massachusetts, with international headquarters in Amsterdam, the Netherlands. Beverage Co. will establish its headquarters in Frisco, Texas.

KDP is a leading beverage company in North America, with a portfolio of more than 125 owned, licensed, and partner brands and annual revenue of more than $15 billion. According to a company statement, KDP leads the market in carbonated soft drinks, coffee, tea, water, juice, and mixers, as well as the top brand for single-serve coffee.

JDE Peet’s is the world’s leading pure-play coffee firm, serving almost 4,400 cups of coffee per second in more than 100 markets. Its top brands include Peet’s, L’OR, Jacobs, Kenco, and Old Town. Last year, the company’s total sales topped 8.8 billion euros.

After the announcement, credit rating firm S&P Global placed Keurig Dr Pepper on negative watch.

In a note issued hours after the merger announcement, S&P Global placed all of Keurig Dr Pepper’s ratings—including its ‘BBB’ long-term and ‘A-2’ short-term ratings—on negative CreditWatch, citing the significant debt burden from the two-step transaction to merge and then split into two companies.

Argotimes News Corporation (USNN) Argotimes News is a media company consisting of a series of sites specializing in the collection, publication and distribution of public opinion information, local,...